Let Us Eat Cake

Poor Marie Antoinette, Queen of France. ‘You Tube’ has no video of her saying it, so we can’t be sure whether she ever did say “let them eat cake” (or “brioche,” for you purists). Marie was responding to the news on the eve of the French revolution that the people had no bread. She ate neither bread nor cake after 1793, when hungry and angry Parisian citizens relieved her of her head. And yet, for all that we do know, the comment was in character–not only for Marie, but for her time.

Fortunately television news was on hand to confirm that the successful primary election candidate for a U.S. Senate seat from Nevada, Sharron Angle, did declare with comparable indifference that congress should abolish Medicare and Social Security. (One assumes Ms. Angle and like-minded friends will virtuously forgo the benefits of both.) When we are old and sick we can eat cake. Ms. Angle wants us to concentrate instead on our domestic “enemies…who pass these kinds of policies–Obama-care, cap and trade, stimulus, bailouts–they’re certainly not friends to the free market system, they’re not friends.” Glenn Beck, for his part, includes that nemesis of the free market system, “collectivism,” in the litany of evils he ascribes to Barack Obama’s “belief structure.”

That sacred totem called the ‘free market’ now supports a large tent under which the devotees of Rush Limbaugh, Glenn Beck, and Sarah Palin struggle to override hard conversations about the three most powerful forces that shape American politics: race, region, and class. The dead give-away is the haste with which their acolytes denounce the “race card” or “class warfare” whenever our current president’s racial heritage, or programs to provide for the greater good, intrude overtly into what passes for political discourse today.

The regions that threaten them are both cultural and geographic: Urbanized regions of the northeast and west coast, inhabited by high-end universities and the “intellectual elites” they produce, people who think it’s important to know what you’re talking about. A lot of these people, whom they regard as alien to “middle America,” don’t even look and sound like real Americans: Jews, African Americans, Muslims, Latinos, people speaking foreign tongues and practicing strange religions, and of course the New York Times.

If, out of a total U.S. population of 322.3 million, we removed 45.4 million Hispanics or Latinos, 36.3 Blacks or African Americans, and the jumble of 41.1 million of other yellow, red, and brown skinned people, that would leave only 62 percent of the U.S. population who might qualify as “real Americans.” Screen out innumerable homosexuals, 5.7 million Jews, 4.7 million Muslims and readers of the New York Times, and the percentage of ‘real’ Americans gets even smaller.

The Limbaugh-Beck-Palin crowd knows that their views–especially of the nation’s first black president–go against the broad, inclusive grain in contemporary American life, so they masquerade their phobias behind a passion for preserving the ‘free market’ against a supposedly predatory ‘government’ (the same government which, as it serves the Constitution, has allowed the land to become cluttered with all those alien people and their un-American ideas). After all, who can oppose FREEDOM? Unfortunately, the free market system cannot support the big tent and shelter all the dark fears collected underneath.

One reason is that the architect of the ‘free market’ political economy, Adam Smith, in his The Wealth of Nations (1776) did not view government as a domestic enemy. To replace an economic model designed to enrich monarchs and their tax collectors (mercantilism), Smith proposed an open economic system of free markets to allocate capital and labor more efficiently (hence, productively), thanks to the market’s automatic regulation of supply and demand. Like an ‘invisible hand’ it would ensure that capital and labor be turned to their most productive uses, and thus wealth would grow throughout the land.

But Smith was essentially a moralist whose economic views emerged from his moral philosophy. His Theory of Moral Sentiments (1759) became as popular in its time as Wealth of Nations. What separated humans from animals, Smith taught, was their inborn capacity for moral judgment and conduct. This capacity was the source of their naturally occurring moral “sentiments,” which included a preference for the benevolence and justice essential to a moral society.

Smith understood that as the multitudes scramble for profits, they could not be relied on to secure society against the “violence and invasion” of enemies, or to ensure justice, or to carry out the public “duty of erecting and maintaining certain public works and certain public institutions which it can never be in the interest of any individual, or small number of individuals, to erect and maintain.” These things must be done by government. Adam Smith’s wealthy nation is one in which the opportunity for private wealth does not trump the public good.

Smith, very much a creature of the 18th century, could not have foreseen that his prescription for achieving national wealth would lead to an economic system “red in tooth and claw.” The Gilded Ages of post-Civil War and post-Reagan America sought to rationalize selfish greed as the competitive energy necessary to create the “richest nation in the world.” What we sowed, we now reap. This nation today finds itself in the midst of an economic crisis of historic proportions, one that is unlikely to end any time soon, while economists and politicians fill op-ed pages and TV screens with prescriptions for cures that shrink from questioning the free market model itself. Were they to do so, they would be denounced as “communists!” “socialists!”–or, horrible to contemplate–people who want America to be like Europe!!

Through much of American history the abundance of natural resources and expansion across a vast continent allowed us to believe in our epoch as a time of endlessopportunity. Recessions and economic depressions, with their unemployment, lost homes, and millions tumbling backward into poverty, would be mere temporary lags in the economy’s readjustments to the ‘free market’ driven business cycle.

We were, and are, wrong. Today nearly 15 million people are out of work, a number equivalent to the entirepopulation of the United States in 1835–or to the combined populations of the New York City, Los Angeles, and Chicago, or the combined populations of Alaska, Arizona, Nevada and Utah. One out of seven Americans has fallen into the slippery sloped depths of poverty, and more are likely to join them in the days ahead. Compounding this widespread failure of our economy to increase national wealth is the failure of the ‘invisible hand’ of the market to distribute what wealth we do generate throughout society to a degree that will be politically sustainable for long.

The disparity in pre-tax incomes between the rich and everyone else is now greater than at any time since the 1920’s. Of incomes reported on tax-returns, 15 percent of all pre-tax income went to 1 percent of households, with average annual incomes of roughly $800,000. The top 10 percent of households now receives over 40 percent of total pre-tax income.

Capital investors large and small welcome increases in our GNP and stock market values, not paying much attention to the cruel irony that, by definition, today’s technology-driven productivity requires job losses. We invent to produce labor saving devices. In 2009 the CEOs of 50 companies with the largest number of layoffs received 40 percent more pay than their peers elsewhere.

Management consultants tell us that this is a good thing: “it is difficult to fire 6,000 people. It does help companies survive, so I think you should reward CEOs for doing that.” And rewarded, they are: In 1982, for every dollar the average worker earned, chief executive officers received $42. By 2004, chief executive officers were being paid $301 for every dollar paid an average worker. The free market proposed by Adam Smith now shares with “original sin” this salient characteristic: At their moments of conception we were innocent of the lives they could waste. What happened?

The conventional answers are that we should have more (or less) regulation, or more (or less ) government, or more (or less) social spending reinforced by more (or less) taxation. But even if we could agree on the right balance of all of the above, natural forces endemic to our society and current political system would become our undoing once again. Stand by for my next post.